Saudi VCs step in to fill a foreign investor gap

Local capital steps up as global investors pull back: Saudi venture capital (VC) firms are continuing to raise and deploy funds, even as regional and global investors remain cautious, Bloomberg reports. With geopolitical tensions and tighter global liquidity pushing international players to scale back exposure, Saudi firms are stepping in to fill the gap.

Some are leaning into the downturn: Khwarizmi Ventures has already raised more than USD 70 mn in the first close of its second fund and begun deploying capital, Managing Partner Abdulaziz Al-Turki said. Similarly, Sharaka Capital is preparing a new USD 30 mn fund to build on its SAR 350 mn in assets under management, maintaining a focus on Saudi prospects, said Abdulelah Alowayyid, a partner at the firm.

This aggressive stance is echoed by Plus VC: “When people are fearful, that’s often the best time to invest,” Managing Partner Hasan Haider told the business information service.

IN CONTEXT- The MENA venture landscape is in a period of adjustment, with higher funding costs and volatile oil prices weighing on activity. Startup funding across the region was broadly flat at USD 799 mn in 1Q, according to Magnitt, with lower participation from international investors continuing to drag on overall transaction flow.

We’re becoming a more self-sustaining capital market: Khwarizmi’s own investor mix is becoming increasingly domestic — led by institutions, family offices, and high-net-worth individuals — with government-linked entities making up about a third of the fund. The transition points to a broader structural shift toward local capital, Al Turki noted

Why it matters: The growing reliance on domestic capital reduces exposure to foreign investors, who accounted for 29% of Saudi funding in 2025 and have historically been the first to retreat during shocks, according to Magnitt data. This shift is helping stabilize the Saudi venture ecosystem, providing a more resilient funding base even as global uncertainty persists.

But caution still persists: Sadu Managing Director Salem Washeely is seeing signs of investor caution, with firms being advised to preserve their funds amid a conflict-induced “slowdown.” Even so, Sadu is still targeting a USD 70 mn fund this year and aims to reach USD 100 mn in AUM by year-end, he added.